– Increases in Occupancy, Leasing Spreads and
Same Property Net Operating Income –
– Company Updates 2019 Guidance –
Kimco Realty Corp. (NYSE:KIM) today reported results for the
first quarter ended March 31, 2019. For the three months ended
March 31, 2019 and 2018, net income available to the company’s
common shareholders was $0.24 per diluted share and $0.30 per
diluted share, respectively.
First Quarter
Highlights:
- Increased pro-rata occupancy to 96.0%,
representing a 20-basis-point improvement from the fourth quarter
of 2018 and the highest first quarter sequential growth level in
ten years.
- Generated new leasing spreads of 17.4%,
representing the highest quarterly increase since the third quarter
of 2017 and the 21st consecutive quarter in which spreads on new
leases increased by more than 10%.
- Grew same-property net operating income
(“NOI”) 3.7% over the same period in 2018.
- Sold seven properties totaling 691,000
square feet for a gross sales price of $101.7 million. Kimco’s
share of the sales price was $84.9 million.
“We are highly encouraged by our strong start to 2019, driven by
robust leasing volume, higher tenant retention, and outperformance
in same-property NOI, all of which demonstrate the appeal of our
well-located properties to growing retail concepts,” said Conor
Flynn, Kimco’s Chief Executive Officer. “We continue to see healthy
demand for space across our portfolio and remain confident in our
ability to deliver additional growth and shareholder value in
2019, as reflected by the raising of our full-year net income
available to the company’s common shareholders and same-property
NOI guidance.”
Financial Results
Net income available to the company’s common shareholders for
the first quarter of 2019 was $101.6 million, or $0.24 per diluted
share, compared to $129.5 million, or $0.30 per diluted share, for
the first quarter of 2018. The decrease was primarily due to $29.9
million of lower gains on the sales of properties, net of
impairments, resulting from the sale of 76 assets totaling $913.9
million in 2018.
NAREIT Funds From Operations (“FFO”) was $158.4 million, or
$0.38 per diluted share, for the first quarter of 2019 compared to
$161.4 million, or $0.38 per diluted share, for the first quarter
of 2018. NAREIT FFO for the first quarter of 2019 included $1.0
million of transactional income (net of transactional charges).
This compares to $3.6 million of transactional income (net of
transactional charges) in the first quarter of 2018.
FFO as adjusted available to common shareholders (“FFO as
adjusted”), which excludes the effects of transactional income and
charges, was $157.4 million, or $0.37 per diluted share, for the
first quarter of 2019 compared to $157.8 million, or $0.37 per
diluted share, for the first quarter of 2018.
A reconciliation of net income available to the company’s common
shareholders to NAREIT FFO, FFO as adjusted and same-property NOI
is provided in the tables accompanying this press release.
Operating Results
- Pro-rata occupancy ended the quarter at
96.0%, representing a 20-basis-point sequential increase.
- Pro-rata anchor and small shop
occupancy ended the quarter at 97.8% and 90.6%, respectively.
- Executed a total of 370 leases for 3.0
million square feet with pro-rata rental-rate leasing spreads
increasing 8.9% during the first quarter of 2019. Spreads on new
leases increased 17.4% with renewals/options growing 7.1%.
- Generated a 3.7% increase in
same-property NOI for the first quarter of 2019 over the comparable
period in 2018 driven by a 3.1% increase in minimum rent.
Investment Activity
As previously announced, Kimco increased its presence in two
high-growth markets in Arizona and California with a $31.2 million
sale-leaseback transaction with Albertsons Companies for three
grocery-anchored parcels located in existing Kimco shopping
centers. The grocery boxes acquired, which generate sales of over
$775 per square foot on a blended basis, include one Vons location
in San Diego, California, and two Safeway locations in Phoenix,
Arizona and Truckee, California.
Additionally, during the first quarter, the company sold seven
properties totaling 691,000 square feet for $101.7 million. Kimco’s
share of these sales was $84.9 million. Notable dispositions
included Arboretum Crossing, in Austin, Texas for $32.5
million; Cave Springs shopping center in St. Peters,
Missouri for $16.7 million and Palm Beach Gardens Plaza in
West Palm Beach, Florida for $16.5 million.
2019 Full Year
Guidance
The company is increasing its 2019 guidance range for Net Income
available to the company’s common shareholders and affirming the
previously provided ranges for NAREIT FFO and FFO as adjusted:
Guidance (per diluted share)
Current Previous Net income available to the
company’s common shareholders: $0.77 to $0.82
$0.71 to $0.76 NAREIT FFO* & FFO as adjusted*:
Unchanged $1.44 to $1.48
* Reconciliations are provided for these forward-looking
non-GAAP metrics (NAREIT FFO and FFO as adjusted) in the tables
accompanying this press release.
The company has updated certain components of its 2019
operational assumptions as follows:
Operational Assumptions (Kimco’s
pro-rata share) Current Previous Same-property
NOI (excluding redevelopments): 1.75% to 2.50%
1.50% to 2.50% Net dispositions:
- Dollar volume:
- Blended cap rate percentage:
- $200 million to $300 million
- 7.50% to 8.00%
Combined redevelopment & development investment:
Unchanged $275 million to $350 million
Dividend Declarations
Kimco’s board of directors declared a quarterly cash dividend of
$0.28 per common share, payable on July 15, 2019, to shareholders
of record on July 2, 2019.
The board of directors also declared quarterly dividends with
respect to each of the company’s Class I, Class J, Class K, Class L
and Class M series of cumulative redeemable preferred shares. All
dividends on the preferred shares will be paid on July 15, 2019, to
shareholders of record on July 1, 2019.
Financial Statement Presentation
Change
On January 1, 2019, Kimco adopted the accounting framework for
leases, ASU No. 2016-02, Leases (“Topic 842”). The following is a
summary of the presentation changes within the 2019 Condensed
Consolidated Statement of Income required by the adoption of the
new standard:
- All income related to tenant leases is
reflected in a single “Revenues from rental properties, net” line
item.
- The impact of bad debt is now a
component and included within the single Revenues from rental
properties, net line item. This change is reflected in 2019
reporting periods but has not been made to 2018 historical
results.
Supplemental footnote support has been provided herein for
comparability purposes. The company’s Net income available to
common shareholders, FFO and FFO as adjusted were not impacted by
these presentation changes.
Conference Call and Supplemental
Materials
Kimco will hold its quarterly conference call on Thursday, May
2, 2019, at 10:00 a.m. Eastern Daylight Time (EDT). The call will
include a review of the company’s first quarter 2019 results as
well as a discussion of the company’s strategy and expectations for
the future. To participate, dial 1-888-317-6003 (Passcode:
4584327).
A replay will be available through August 2, 2019, by dialing
1-877-344-7529 (Passcode: 10128854). Access to the live call and
replay will be available through the company's website at
investors.kimcorealty.com.
About Kimco
Kimco Realty Corp. (NYSE: KIM) is a real estate investment trust
(REIT) headquartered in New Hyde Park, N.Y., that is one of North
America’s largest publicly traded owners and operators of open-air
shopping centers. As of March 31, 2019, the company owned interests
in 430 U.S. shopping centers comprising 75 million square feet of
leasable space primarily concentrated in the top major metropolitan
markets. Publicly traded on the NYSE since 1991, and included in
the S&P 500 Index, the company has specialized in shopping
center acquisitions, development and management for more than 60
years. For further information, please visit
www.kimcorealty.com, the company’s
blog at blog.kimcorealty.com, or follow Kimco on Twitter at
www.twitter.com/kimcorealty.
The company announces material information to its investors
using the company’s investor relations website
(investors.kimcorealty.com), SEC filings, press releases, public
conference calls, and webcasts. The company also uses social media
to communicate with its investors and the public, and the
information the company posts on social media may be deemed
material information. Therefore, the company encourages investors,
the media, and others interested in the company to review the
information that it posts on the company’s blog
(blog.kimcorealty.com) and social media channels, including
Facebook (www.facebook.com/kimcorealty), Twitter
(www.twitter.com/kimcorealty), YouTube
(www.youtube.com/kimcorealty) and LinkedIn
(www.linkedin.com/company/kimco-realty-corporation). The list of
social media channels that the company uses may be updated on its
investor relations website from time to time.
Safe Harbor Statement
The statements in this news release state the company’s and
management’s intentions, beliefs, expectations or projections of
the future and are forward-looking statements. It is important to
note that the company’s actual results could differ materially from
those projected in such forward-looking statements. Factors which
may cause actual results to differ materially from current
expectations include, but are not limited to, (i) general adverse
economic and local real estate conditions, (ii) the inability of
major tenants to continue paying their rent obligations due to
bankruptcy, insolvency or a general downturn in their business,
(iii) financing risks, such as the inability to obtain equity, debt
or other sources of financing or refinancing on favorable terms to
the company, (iv) the company’s ability to raise capital by selling
its assets, (v) changes in governmental laws and regulations and
management’s ability to estimate the impact of such changes, (vi)
the level and volatility of interest rates and foreign currency
exchange rates and management’s ability to estimate the impact
thereof, (vii) risks related to the company’s international
operations, (viii) the availability of suitable acquisition,
disposition, development and redevelopment opportunities, and risks
related to acquisitions not performing in accordance with our
expectations, (ix) valuation and risks related to the company’s
joint venture and preferred equity investments, (x) valuation of
marketable securities and other investments, (xi) increases in
operating costs, (xii) changes in the dividend policy for the
company’s common and preferred stock and the company’s ability to
pay dividends at current levels, (xiii) the reduction in the
company’s income in the event of multiple lease terminations by
tenants or a failure by multiple tenants to occupy their premises
in a shopping center, (xiv) impairment charges and (xv)
unanticipated changes in the company’s intention or ability to
prepay certain debt prior to maturity and/or hold certain
securities until maturity. Additional information concerning
factors that could cause actual results to differ materially from
those forward-looking statements is contained from time to time in
the company’s SEC filings. Copies of each filing may be obtained
from the company or the SEC.
The company refers you to the documents filed by the company
from time to time with the SEC, specifically the section titled
“Risk Factors” in the company’s Annual Report on Form 10-K for the
year ended December 31, 2018, as may be updated or supplemented in
the company’s Quarterly Reports on Form 10-Q and the company’s
other filings with the SEC, which discuss these and other factors
that could adversely affect the company’s results. The company
disclaims any intention or obligation to update the forward-looking
statements, whether as a result of new information, future events
or otherwise.
Condensed Consolidated Balance Sheets
(in thousands, except share information) (unaudited)
March 31, December 31, 2019 2018
Assets: Real estate, net of accumulated depreciation and
amortization of $2,393,946 and $2,385,287, respectively $ 9,221,743
$ 9,250,519 Real estate under development 275,914 241,384
Investments in and advances to real estate joint ventures 566,928
570,922 Other real estate investments 201,880 192,123 Cash and cash
equivalents 143,673 143,581 Accounts and notes receivable, net
183,650 184,528 Operating lease right-of-use assets, net 104,177 -
Other assets 372,235 416,043 Total assets $
11,070,200 $ 10,999,100
Liabilities: Notes
payable, net $ 4,383,413 $ 4,381,456 Mortgages and construction
loan payable, net 485,341 492,416 Dividends payable 130,444 130,262
Operating lease liabilities 97,133 - Other liabilities
553,327 560,231 Total liabilities 5,649,658
5,564,365 Redeemable noncontrolling interests
23,684 23,682
Stockholders' equity:
Preferred stock, $1.00 par value, authorized 5,996,240 shares;
issued and outstanding (in series) 42,580 shares; Aggregate
liquidation preference $1,064,500 43 43 Common stock, $.01 par
value, authorized 750,000,000 shares; issued and outstanding
422,037,132 and 421,388,879 shares, respectively 4,220 4,214
Paid-in capital 6,119,855 6,117,254 Cumulative distributions in
excess of net income (804,241) (787,707) Total
stockholders' equity 5,319,877 5,333,804 Noncontrolling interests
76,981 77,249 Total equity 5,396,858
5,411,053 Total liabilities and equity $ 11,070,200
$ 10,999,100
Condensed Consolidated
Statements of Income (in thousands, except per share data)
(unaudited) Three Months Ended March 31, 2019 2018
Revenues Revenues from rental properties, net $ 290,634 $ 299,717
Management and other fee income 4,376 4,361 Total
revenues 295,010 304,078 Operating expenses Rent
(2,692) (2,818) Real estate taxes (39,347) (40,434) Operating and
maintenance (40,896) (43,331) General and administrative (25,831)
(22,398) Provision for doubtful accounts - (2,131) Impairment
charges (4,175) (7,646) Depreciation and amortization
(71,561) (81,382) Total operating expenses (184,502)
(200,140) Gain on sale of properties/change in
control of interests 23,595 56,971 Operating income
134,103 160,909 Other income/(expense) Other income, net
2,622 6,179 Interest expense (44,395) (49,943) Income before income
taxes, net, equity in income of joint ventures, net,
and equity in income from other real estate investments, net 92,330
117,145 Provision for income taxes, net (630) (52) Equity in
income of joint ventures, net 18,754 16,913 Equity in income of
other real estate investments, net 6,224 9,976 Net
income 116,678 143,982 Net (income)/loss attributable to
noncontrolling interests (509) 108 Net income
attributable to the Company 116,169 144,090 Preferred dividends
(14,534) (14,589) Net income available to the
Company's common shareholders $ 101,635 $ 129,501 Per common
share: Net income available to the Company: (2) Basic $ 0.24 $ 0.30
Diluted $ 0.24 (1) $ 0.30 (1) Weighted average shares: Basic
419,464 423,404 Diluted 420,763 424,521
(1) Reflects the potential impact if
certain units were converted to common stock at the beginning of
the period. The impact of the conversion would havean anti-dilutive
effect on net income and therefore have not been included. Adjusted
for distributions on convertible units of $25 and $244 for the
threemonths ended March 31, 2019 and 2018, respectively.
(2) Adjusted for earnings attributable
from participating securities of ($625) and ($599) for the three
months ended March 31, 2019 and 2018, respectively.
Reconciliation of Net Income Available to the
Company's Common Shareholders to FFO and FFO as Adjusted
Available to the Company's Common Shareholders (in thousands,
except per share data) (unaudited) Three
Months Ended March 31, 2019 2018 (1) Net income
available to the Company's common shareholders $ 101,635 $ 129,501
Gain on sale of properties/change in control of interests (23,595)
(57,423) Gain on sale of joint venture properties (4,690) (2,039)
Depreciation and amortization - real estate related 71,260 78,992
Depreciation and amortization - real estate jv's 10,161 9,284
Impairment charges 6,408 7,714 Profit participation from other real
estate investments, net (1,030) (4,728) (Gain)/loss on marketable
securities (1,503) 1,510 Noncontrolling interests (2) (248)
(1,418) Funds from operations available to the Company's
common shareholders 158,398 161,393 Transactional income, net
(1,000) (3,581) Funds from operations available to
the Company's common shareholders as adjusted $ 157,398 $ 157,812
Weighted average shares outstanding for FFO calculations:
Basic 419,464 423,404 Units 927 933 Dilutive effect
of equity awards 1,182 287 Diluted (3) 421,573
424,624 FFO per common share - basic $ 0.38 $ 0.38
FFO per common share - diluted (3) $ 0.38 $ 0.38 FFO as adjusted
per common share - diluted (3) $ 0.37 $ 0.37 (1) Certain amounts
have been reclassified in order to conform with NAREIT's
clarification guidance adopted January 1, 2019. (2) Related to
gains, impairments and depreciation on properties, where
applicable.
(3) Reflects the potential impact if
certain units were converted to common stock at the beginning of
the period. Funds from operations would beincreased by $261 and
$264 for the three months ended March 31, 2019 and 2018,
respectively.
Funds From Operations (“FFO”) is a
supplemental non-GAAP financial measure utilized to evaluate the
operating performance of real estate companies. EffectiveJanuary 1,
2019, the Company adopted the National Association of Real Estate
Investment Trusts (“NAREIT”) Funds From Operations White Paper –
2018Restatement ("FFO White Paper - 2018 Restatement") which
clarifies, where necessary, existing guidance and consolidates
alerts and policy bulletins into a singledocument for ease of use.
NAREIT defines FFO as net income/(loss) available to the Company’s
common shareholders computed in accordance with generallyaccepted
accounting principles in the United States (“GAAP”), excluding (i)
depreciation and amortization related to real estate, (ii) gains or
losses from sales ofcertain real estate assets, (iii) gains and
losses from change in control, (iv) impairment write-downs of
certain real estate assets and investments in entities when
theimpairment is directly attributable to decreases in the value of
depreciable real estate held by the entity and (v) after
adjustments for unconsolidated partnershipsand joint ventures
calculated to reflect FFO on the same basis. Included in the FFO
White Paper - 2018 Restatement is an option for the Company to make
anelection to include or exclude gains and losses on the sale of
assets and impairments of assets incidental to its main business in
the calculation of FFO. Inconjunction with the adoption of the FFO
White Paper - 2018 Restatement, the Company has elected to exclude
gains/impairments on land parcels, gains/losses(realized or
unrealized) from marketable securities and gains/impairments on
preferred equity participations in NAREIT defined FFO.
The Company’s reconciliation of net income
available to the Company’s common shareholders to FFO available to
the Company’s common shareholders and FFOavailable to the Company’s
common shareholders as adjusted, is reflected in the table above
(in thousands, except per share data). In conjunction with the
adoptionof NAREIT’s FFO White Paper – 2018 Restatement, the Company
has reclassified $3.5 million from transactional income into FFO
available to the Company’scommon shareholders for the three months
ended March 31, 2018, relating to incidental gains and losses on
the sale of assets and mark-to-market changes in equitysecurities.
This reclassification had no impact on FFO available to the
Company’s common shareholders as adjusted for the three months
ended March 31, 2018.
Reconciliation of Net Income Available to the
Company's Common Shareholders to Same Property NOI (in
thousands) (unaudited) Three Months
Ended March 31, 2019 2018 Net income available to the Company's
common shareholders $ 101,635 $ 129,501 Adjustments: Management and
other fee income (4,376) (4,361) General and administrative 25,831
22,398 Impairment charges 4,175 7,646 Depreciation and amortization
71,561 81,382 Gain on sale of properties/change in control of
interests (23,595) (56,971) Interest and other expense, net 41,773
43,764 Provision for income taxes, net 630 52 Equity in income of
other real estate investments, net (6,224) (9,976) Net
income/(loss) attributable to noncontrolling interests 509 (108)
Preferred dividends 14,534 14,589 Non same property net operating
income (26,258) (34,995) Non-operational expense from joint
ventures, net 14,793 14,372 Same Property NOI $
214,988 $ 207,293 Certain reclassifications of prior year
amounts have been made to conform with the current year
presentation.
Reconciliation of Diluted Net Income
Available to Common Shareholders Per Common Share to Diluted
Funds From Operations Available to Common Shareholders Per Common
Share (unaudited) Projected Range
Full Year 2019
Low
High
Diluted net income available to company's common shareholder
$ 0.77 $ 0.82 per common share Depreciation and amortization
- real estate related 0.67 0.70 Depreciation and
amortization - real estate joint ventures, net of noncontrolling
interests 0.09 0.10 Gain on sale of properties/change in
control of interests (0.08) (0.12) Gain on sale of joint
venture properties (0.03) (0.04) Impairments charges 0.02
0.02 Profit participation from other real estate
investments, net - - (Gain)/loss on marketable securities -
- Noncontrolling interests - - FFO per diluted
common share $ 1.44 $ 1.48 Transactional (income)/expense,
net - - FFO as adjusted per diluted common share $
1.44 $ 1.48
Projections involve numerous assumptions
such as rental income (including assumptions on percentage rent),
interest rates, tenant defaults, occupancyrates, selling prices of
properties held for disposition, expenses (including salaries and
employee costs), insurance costs and numerous other factors. Notall
of these factors are determinable at this time and actual results
may vary from the projected results, and may be above or below the
range indicated. Theabove range represents management’s estimate of
results based upon these assumptions as of the date of this press
release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190502005175/en/
David F. BujnickiSenior Vice President, Investor Relations and
StrategyKimco Realty
Corp.1-866-831-4297dbujnicki@kimcorealty.com
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